Corporations are set to start playing a greater role in the UAE's real estate market, says a property consultant.

"Companies and corporate entities dominate real estate around the world – except here," Blair Hagkull, Managing Director of Jones Lang LaSalle (JLL) Mena, told Emirates Business. "We have families, or just individuals, owning properties. But moving forward, we see greater corporatisation of real estate."

Individuals have accounted for the majority of transactions in Dubai's realty market since the freehold property law was announced in 2002. A recent report indicated that Indian and British individuals topped the list of property investors in Dubai last year. But Hagkull expects 2010 to be the "year of commercial performance".

"What happened in 2009 was that we had a lot of residential supply coming on to the market," he added. "At the same time, we had reductions in demand and pricing. In 2010, we are seeing a lot more commercial supply coming on to the market and certainly we are witnessing a reduction in pricing in outlying areas."

JLL last month said an additional 60 million sq ft of office supply was expected to enter the market between 2009 and 2011, but subsequently revised the figure downwards by 33 per cent to about 40 million sq ft due to project delays and cancellations. Total tenant demand at the end of 2009, according to the company, stood at 2.7 million sq ft, with existing tenants looking to dispose of surplus space. The total tenant disposable space was 295,000 sq ft.

About 17,000 units were completed in 2009, taking the total residential stock to about 273,000. Supply estimates for 2009 were at 22,400 units of which only 76 per cent were delivered.

The global real estate consultancy expects 24,000 units to be completed in 2010, followed by 25,000 units in 2011, bringing the total residential stock to 322,000 by end of 2011.

Project cancellations and construction delays decreased future supply estimates by about 60 per cent since the second quarter of 2008. Apartments will now comprise 77 per cent of total residential stock by the end of 2011.

Hagkull said the real estate market would remain flat in 2010 and was unlikely to see any growth. "We expect prices to be flat, at best the market will be stable. Some properties in non-central locations far from amenities could see declines of 15 to 20 per cent or even more. The market will move away from off-plan sales towards a long-term model based on secure cash flows."

Rents in Dubai declined by an average of 44 per cent between the fourth quarter of 2008 and the fourth quarter of 2009, but only 18 per cent between the fourth quarter of 2007 and the fourth quarter of 2009. Rents peaked in the fourth quarter of 2008 but bottomed out in 2009 to about Dh200 to Dh250 per sq ft.

Craig Plumb, National Director, Research, at JLL Mena, said: "Prices have already adjusted in the residential market. They haven't fully adjusted in the commercial market and so we are expecting prices to fall further in this segment than in the residential market in 2010." Dubai's residential market will experience a period of over-supply and prices are not expected to recover fully before 2011 at the earliest, according to JLL.

Hagkull said there was a shortage of investment-grade properties in the UAE. The best investment assets were those that had at least a three-year track record and tenants and operating structures in place. "There are not many assets that have income attached to them and there are very few available for sale that have cash flow attached. It is much easier to sell projects that are nearly finished or already finished than it is to sell projects that need more money putting into them, and this is why we talk about a lack of investment-grade."

Hagkull said the trend of Middle East investors pouring their cash into foreign assets would change in 2010, which will see more capital flows within the region. In 2009, regional investors bought $1 billion (Dh3.6bn) worth of real estate in London alone.

Asked when real estate funds would start investing in the local market, he added: "Right now we are at the tipping point. We expect to see a significant number of transactions coming up closer to the end of the year. We are in the area of transition and it is important to deliver what you have started."

He said lack of transparency tended to have a negative affect on perceptions of the market place or company because there were "more questions than answers".

"When things were buoyant a lot of players here were saying, 'Get the regulator away and let's do business'. But when things started to turn bad these people said, 'Where are the regulations?' However, we do see a trend towards greater regulation and perhaps smart regulation." Hagkull believes time is right to bring together the positive aspects of Dubai and Abu Dhabi to create a more sustainable market.

"Abu Dhabi has a less regulated environment but a more stable planning entity than Dubai. Perhaps there is an opportunity to bring the two together."

Asked if Dubai was likely to see any listings of any real estate investment trusts (Reits) in near future, Plumb said: "The big problem that Reits have in this region is that there is no tax, but we believe they will come in the future." More than 20 markets worldwide have Reit regulations, including Dubai since 2006.